themodernchap's Journal. (UK, Hard Mode, neg NW)

[themodernchap]

Hi folks,

First of all I'd like to express gratitude for the existance of this site, I have read in many member's journals how surprised they were to find so much in common with the other people on the site and I must say I feel the same way. I can't express how difficult it is to find people where I live who are not fully invested in the consumer cycle. I am here to learn and to share my experiences, good and bad in the hope that you will keep me honest. My girlfriend has already told me she has no interest in learning about investing etc. so this is really my only outlet for this stuff.


About Me
I am 26 later this month. I did a degree in English Literature and graduated in 2012. I was unemployed for about 8 months and then worked in a Thai restauraunt for minimum wage. I went on to qualify as a highschool teacher but there are virtually no jobs in that field in this country at the minute and to be honest I doubt I will ever teach full time again.

Starting Point
In the spirit of honesty, my current net worth is probably somewhere around £-1700. I had a hard year last year and lost a lot of my capital to bad decisions prompted by wanting to please other people, I am 100% done with that. I hope that in working on this journal I can encourage others to make some changes too, because I think I'm starting from a fairly unpromising position.
I have around £1500 saved in my local Credit Union and a further £300 saved in a self-selected ISA with Hargreaves lansdown. In this ISA I hold 2 funds but I am going to have to rebuild my portfolio from scratch.

How I Ended up Here
I lost my job twice this year, the first time I was working for an awful part of government and it made me miserable. I met a woman there who spoke to my true nature and it forced me to bring my actions back in line with my beliefs. I woke up one day and literally could not force myself out the door to work. I had hit rock bottom. I quit, followed by her about a month later. I took a month off on Statutory Sick Pay (£88/week) while looking for another job. This didn't even cover my rent, which was at the time £450. I had been earning £9.8/h for about a year and a half so the adjustment was tough. I started a new job working with disabled kids in a local college, I loved the work but was lied to repeatedly by management from the beginning, the result being that when I demanded better treatment I was let go 2 weeks before Christmas. I earned minimum wage in that job. During that year due to not being able to pay the rent I lost my rented flat, which I really liked, but I couldn't afford it so I had to let it go. I earned so little while working for the college that I had to carry the difference through credit to keep the bills paid. Thankfully I have now got another job, which I started a few days before Christmas. It is a temporary job, but this is due to public sector budgets, from what I have been told it looks as though it should be fairly stable, most of the staff are temporary, but most have also been there for 3+ years which gives me some confidence. I don't ever want to have another year like last year so thats why I am here.

First Steps
This week I paid off a total of £632.50 of debt. So that's a start. For the first 12 weeks of this new job I earn minimum wage, but after that I will earn £9.85/h which apparently for my age and job will put me in the 59% percentile of earners in the UK. According to my calculations my goss income should be around £19,207.50 annually, £1,600.63 monthly or £369.38 per week. I am paid weekly. We will have to see how that works out with taxes. In the past few months I have seriously contracted my spending to cope with the job situation so I now feel I am in a decent position going into my ERE journey.

Data
Committed Spending (monthly, rounded up to nearest whole pound.)
Rent £250.00
Phone £12.00
Heating £20.00
Electricity £19.00
Internet £14.00
Loan Repayments £70.00
Fuel £25.00
Transport £40.00
-------------------------------------
Total = £450.00

Semi-Committed Spending (In process of reducing these)
Pet food for 2 Bearded Dragons £20.00
Pet food for 3 Royal Pythons £24.00
-------------------------------------------------
Total = £44.00

Discretionary Spending on things like coffees and lunches came to a total of about £120 but I have already cut these expenses, in fact this week was my first successful week in which I spent no discretionary money at all. I have paid a £2.00 bus fare daily and £25.00 in fuel, that is all. Food is paid for (and for this I am grateful) by my girlfriends mother. So, so far I have ditched takeaways, coffees, restauraunts, laziness lunches, and a while ago I jettisoned the gym because it was £50 a month and I basically only went to use the sauna.

For the first 12 weeks of this job my income will fluctuate but I am using this time to pay off as much debt as possible before I start giving you folks nice charts and things (albiet with small numbers) to pick over and help me improve upon. I would welcome any and all feedback.

It feels really good to be here.
Thanks
Robert

[cmonkey]

Welcome. You aren't in as bad a spot as many people, your numbers look really good. Off the bat 500 out of 1600 monthly is already 70% savings rate. As with anything the more you think about this lifestyle and practice it the more natural and easy it will get.

These days I get a lot of pleasure by not spending money...more so than I ever got by spending on anything. Developing this sort of pleasure taking is an important part of this lifestyle and it sounds like you are going that way.

[thrifty++]

Nice. You are not in as bad a shape as you might think. Many people your age start of with much greater negative NW. At your age I had NW of about - $50k. Of course I never discovered ERE at that age either. So took me a while to get started.
The good thing is your expenses look ridiculously low. Your rent is so cheap. Whats your living situation like?

[themodernchap]

In terms of negative NW... I also owe around £30,000 in student debt, but here in the UK student loans work differently. You don't have to pay anything towards it until you are earning 21k+ and then the repayments are taken from your paycheque just like taxes. I am not including student loans in my figures because they don't affect credit score, the repayments are out of my control etc.

Living situation... I live with 2 other guys, both of whom I have known for years and one of them is a good friend of mine. The other one though is like an overgrown child, the house is full of his plastic junk and he doesn't clean up after himself very well. There are often stacks of dirty dishes etc. That is the main reason I am planning on moving in about 6 months. At the moment we have 2 rooms, one bedroom which I share with my partner (very small) and a very small living room. My partner doesn't pay rent here but does help with the bills because she has a tenancy on another house elsewhere which she will terminate when we move in 6 months. She is doing this because she doesn't want to leave the other tenant liable for the full rent.

The places I am looking at to move to are even cheaper though, £225 each sharing with my partner. That would get us a very small 2 bedroom factory workers terrace house. The area is a rough area but the local paramilitary group keeps it pretty safe, there is virtually no street crime or burglary because anyone caught doing that kind of thing in the area we are moving to (where I grew up) gets their kneecaps broken. Northern Ireland is an odd place by developed world standards. The smaller house will also be easier to heat so should be more comfortable. I'm hopefully going to take some time later and start putting together google sheets data, because I know you folks love a nice graph.

Robert

[OldPro]

You say net worth of 1700. You say loan repayments of 70 per month. You say you do not have to make student loan payments on the 30k owed until you earn over 21k.

So, your net worth is not 1700, it is at least 30k (student loan) minus 1700 which means at least minus 28,300 for your net worth. You can't just 'not include' the 30k in your figures. I say 'at least' because that 70 per month loan repayment you show doesn't appear to apply to your student loan since you aren't earning over 21k per year yet. Do you owe money other than the student loan? Credit card debt maybe? Or are you voluntarily paying 70 per month on the student loan?

[themodernchap]

The student loan I am not including because last year I paid a total of about £9.00 of interest off. It is so negligible that I am not tracking it though I will happily include the annual statements if the folks here find them interesting. The job I am in does not have pay rises to the best of my knowledge so the likelihood of me earning more than 21k is slim. Last year the interest was around £300. So although the amount will keep increasing it will cost me either nothing of next to nothing. When I turn 45 (I will need to check to be sure) the loan is written off. Many UK students never pay their student loans off because they never earn over the threshold and it doesn't affect credit score. Also due to the fact that the student loan repayment the are taken before wages are paid automatically it is very much like a tax, if they take payments they will be inconsequential and taken before I receive my net income. Does that clarify the situation a bit?

Edit: I'm not sure if I have made it clear, the student loans don't start taking gross pay until oner is earning more than 21k per year. So if you earn 20k p/a you pay back nothing even if that's your income level for decades.

[thrifty++]

In NZ student loans are 0% interest as long as you don't leave the country for more than 6 months. But you have to pay it back like a tax once your income hits $19.5k. This is much less than your threshold. I don't think student loans ever get written off here. I include my student loan on NW as I will end up getting student loan deductions until I am FI. Its up to you whether you want to include it in your NW or not though. I include payments of my student loan in my savings percentage though.

Your flatting situation doesn't sound so great. I pay $833 where I am which is actually regarded as cheap. I have found one cheaper place for $780 a month which is 7 kms out of the city centre but by a nice beach. It would be sharing with three other people. However where I am at the moment I am right in the city in a 2 bedroom apartment with one flatmate who I like so I am not sure I can be bothered moving to save such a tiny sum for the inconvenience of living further from everything and having another two flatmates who I may or may not like. Tossing it up today as to whether I will move.

[Fiddle]

Hi Robert,

You''ve found ERE much earlier than many and with the knowledge here you'll get traction in a positive net worth direction in no time.

I was -35k pounds til at least 29yrs old. Then I financially woke up and started giving my money the respect it needed. Several short years later my situation has changed quite a bit.

I agree the SL is not worth getting distracted about atm. As there is so much you can do right now to improve your finances but to do that you must be motivated and believe the goal is achievable.

SL is something you can mop up when you are ready too and if you never are ready, as you say, they are written off!! handy that!

Good luck

[themodernchap]

If I were you I wouldn't move. If I just had the messy childish guy out I probably wouldn't move either but then the rent would go up I suppose. It's a big cold end terrace and we have loud student neighbours right behind us so it's sensable to move especially when my commute won't change and the rent will likely be slightly lower. Living by a beach in New Zealand sounds good though... Lol

[thrifty++]

If I were you I wouldn't move. If I just had the messy childish guy out I probably wouldn't move either but then the rent would go up I suppose. It's a big cold end terrace and we have loud student neighbours right behind us so it's sensable to move especially when my commute won't change and the rent will likely be slightly lower. Living by a beach in New Zealand sounds good though... Lol

Yeah I thought living by the beach is nice. But in reality I can (and do) finish my work and walk home in 10 minutes get shorts on and make it to that beach (or other beaches) in 20/30 minutes for a swim when I want to anyway lol

[skintstudent]

Hi, welcome. Always nice to have another UK ERE poster.

I think you said you were in NI. If so, you probably got the best of the student loans with it wiped 25 years after graduation. Here in Scotland it's 35 years! You're probably right not to worry about them at the moment, but keep an eye out for any changes sneaked through. The morality of the government changing the terms of repayment for debts already accrued stinks, but they've already done this with the post 2012 loans, proving that integrity is not high on their agenda. Also, you'll probably be on the 17.3k threshold, not 21k.

I look forward to following your progress in this journal. You seem to be off to a good start.

[themodernchap]

you probably got the best of the student loans

The best would have been if I had gone to the Republic of Ireland, it's free down there. I didn't know that at the time though. Plus the cost of living in Dublin is insane so I couldn't have afforded to go to university without the student loans in any case. If the student loans ever end up taking out a chunk of my gross income (which I don't think they will) I will report it accurately here, but heres hoping that will never happen. According to the Student Loans Company website I have a "Plan 1" loan.

You were correct in saying that I start repaying at an income of £17,335 gross per year. In April this will rise to £17,495. The rate of repayment is 9% of anything above that figure so £19,000 - £17,495 = £1505 / 100*9= £135.45 p/a. I am planning on logging the amounts from my paycheques so I will have accurate figures to work from.

Last year I was charged £300 in interest. At this rate I will never pay it off, nor will I worry about it because it is taken from my gross pay and it will be written off in the year 2037 when I am 47 years old, and hopefully FI! The current APR on that loan is 0.9% My budgeting etc. will work with net figures, little point accounting for money to which I never had access nor control.
------------------------------------------------------------------------------------------------------------------

I've decided that in order to give myself a nice fresh start I am going to liquidate part of what remains of my portfolio and use the money to pay off debt faster, the remainder will be left alone until I have some cash to inject. I like the idea of holding some gold and silver as a precation against inflation, I have a good and cheap income fund run by Neil Woodford, he avoids oil and mining because he thinks they are set for longterm decline, which I agree with. At the moment buying individual shares is prohibitively expensive due to trading costs. The cost is based on the number of trades in the previous month.

I think it's safe to assume I won't be making 9+ trades a month so I will pay £11.95 / trade initially. I can then inject cash regularly into these holdings for £1.50 per stock per month (for FTSE350 shares and selected investment trusts, min £25.00 per stock per month) Dividend reinvestment is 1% (min £1 max £10) No charges for buying units in funds.
Finally a 0.45% annual charge is levied on the accunt capped at £45 per year max. I can't find any more cost effective way of doing it, particuarly when you consider my returns will be tax-free due to being held in ISAs.

[chenda]

Welcome.

So what are you aiming to do long term ?

[themodernchap]

@chenda
Retire early to a smallholding ideally and focus on developing self sufficency. I don't really have any grand ambitions I would just like a nice peaceful life, away from the city. I spend a lot of time in the rural parts of Ireland and I love it. I actually like to work, but only on things from which I can step back and say "I did a good job of that, I'm proud of that." I haven't found any office type work that gives me that. I perfer working with my hands and to be honest I didn't accept or realise that until the last few years.

[chenda]

@themodernchap That sounds nice

Maybe you should focus on learning a trade or something you can make and sell from home. You could semi-retire very quickly with your low expenses. Alternatively, work full time and save up a large down payment on a small holding (cheap in remote parts of Ireland ?) then semi-retire and grow things

[themodernchap]

@chenda

I have seen a 5 acre smallholding on good rich land with a 3 bedroom cottage go for as little as 50,000 euro in County Mayo. That's quite a long way away from where I am from but it's a beautiful part of the world, I wouldn't take much convincing!

Last night I applied for some part time evening work in a pizza place near my house in Belfast, would bring in an extra £100 - 150 per week for little effort. Girlfriend isn't altogether thrilled with the idea of me working more hours but they are currently hours I tend to waste on reddit or watching Netflix. I would't want to do more than 2 evenings a week.

In terms of learning a trade... I have been accepted onto an Electrotecnical apprenticeship starting in September but I am in two minds... Due to my age I would have to self fund it, and while I would be earning a wage during the apprenticeship it will cost about £6000 over 4 years, which I really don't think is very much when you consider that there is a huge skills gap in that trade in Northern Ireland. I have also been offered a place on a Computer Science conversion Masters costing around £5000 but I don't really care for that kind of work, so I don't think it would be a very good idea to follow that path. I know this forum is quite STEM heavy, but what would you guys think of someone like me retraining in a trade? I think the earning potential is quite good.

[chenda]

@chenda

I have seen a 5 acre smallholding on good rich land with a 3 bedroom cottage go for as little as 50,000 euro in County Mayo. That's quite a long way away from where I am from but it's a beautiful part of the world, I wouldn't take much convincing!

Astounding!! Though I suppose there are very limited job opportunities remote Co. Mayo, hence the cheap property. Correct me if I'm wrong but my understanding is that there is little if any income in smallholding any more, so I imagine it would be more of a lifestyle/hobby business ? If so being an electrician sounds like a perfect trade to do for such a remote area, where you'll always have work available.

£6000 over four years could probably give you a excellent ROI, as long as you have the aptitude for it. Doing what you're naturally very good at usually gives you much more satisfaction than trying to find something you think sounds enjoyable, in my opinion.

[themodernchap]

Chenda you would be correct, no offices in rural mayo lol.

Last night I sold an old possession my girlfriend was given for free for £50, gave her £30 and paid my electric bill. Am I doing it right?!

I'll be making some moves soon about retraining as a spark and ill keep you updated as to how that goes. I've made a few minor plays for additional income eg. Advertising as a tutor, joined fiverr offering copyediting and proofreading, transcription etc. (I often post here from my phone, forgive typos) etc. I'm going to try for some weekend work as an electricians mate.

I'm figuring out how to go about cycling home from work without churning through clothing, this would save £40/m.

[Ydobon]

Chenda you would be correct, no offices in rural mayo lol.

Last night I sold an old possession mu girlfriend was given for free for £50, gave her £30 and paid my electric bill. Am I doing it right?!

Well, assuming you had her permission to spend her £20

I am a fellow English Literature graduate, although I never quite had the cojones to go for the default 'what the hell else can I do with this useless degree?' option that is teaching. Secondary teaching was not something that I could ever visualise - I suspect that an introvert would be eaten alive.

Have you ever considered leaving NI? The job prospects don't sound great and your comment about 'the local paramilitary group' chilled me - that's not the sort of thing you expect to read in a diary about someone living in a developed country.

It sometimes strikes me that the tax situation in the UK is a bit of a joke. I think you've hit a relatively sweet spot in terms of pounds in your pocket.

[themodernchap]

@Ydobon

Teaching is a tough job, very stressful and a lot of unpaid hours, not to mention a lot of personal liability. The job itself is a performance, an act. It has to be in order that the teacher can command respect etc. from the outset. After some months you can soften down a bit and be a bit more genuine. I think I am moderately introverted, but I'm quite good at playing the game.

I've considered leaving many times but I have good family ties here and I really do love the country. Paramilitary groups are just part of the fabric of urban life here, so long as you don't deal drugs or steal cars or mug /burgle anyone or go drinking in any particularly rough bars you are unlikely to have any bother. When you grow up around it it isn't scary.

Yeah the working class here foot the bill. I earn pretty much as much now as I did when I was on 26k due to taxation and I'm much less stressed and I don't take amy work home. What are you doing post English degree?